ZWICKER ENGINEERING
52 Stillwater Lake Drive,
Stillwater Lake, Nova Scotia B3Z 1H7
Ph: 902-456-3018
Email: Ze@ns.sympatico.ca
Date: 120319
SUBJECT: PROPERTY TAX ELIMINATION
A: BACKGROUND
Previous centuries saw residents paying tax on many possessions including jewellery. Property was
probably the only indicator of “ability to pay” since income would be difficult to measure with
currency often being sheep or goats.
Today we measure income to the n’th degree as verified by a glance through an income tax return.
But municipalities are still stuck on property taxes, fussing about assessments, caps, appeals,
evictions, sheriff sales, etc. costing an enormous amount of time, money, frustrations, and
hardships. It is also an economy damper being a disincentive to property improvements. The $17
million for Nova Scotia assessments is just part of the total cost. Municipal staff time is also
required setting rates, bills, collections, defaults, evictions, etc. It’s truly an abominable system.
B:
ALTERNATIVES
Most would agree there has to be a better alternative especially with today's technology. HRM’s
tax reform committee got off to a good start in 2006 requesting participants to brain storm what the
basic principle should be behind municipal funding such as: services received, ability to pay, etc.
B:1: Services Received: Since the municipality is in the business of providing services it only
follows that recipients should pay for the services. When this became the recommended
principle, it was pushed off the rails by those adding a separate principle, “ability to pay”.
Some councillors assumed the municipality had a welfare role and wanted to continue to
subsidize the home owners getting the services they could not afford. The discussion became a
welfare issue and self destructed in confusion. The HRM council voted to stop considering a
better way to provide revenue.
B:2: Ability to Pay: Our old property tax system is a poor indicator of “ability to pay”.
B:2:a: The senior widow left on her own by a successful, high income husband is to be evicted.
This after major contributions to society through years of high income and property taxes
can’t be considered fair by anyone.
B:2:b: The family that resided in an old house on the ocean for generations is to be evicted since
a wealthy foreigner just purchased the lot next door. Yes we apply temporary bandaids
such as “assessment cap” but we are just plugging holes in a hopeless system.
B:2:c: The millionaire investor who has little interest in living in a rich home floats quietly under
the radar. Yet he is the same burden on the municipality as his neighbour paying a
mortgage on a large house which employed many to build.
C:
PROPOSAL
C:1: Let’s at least reduce the high operating cost of the current system and be consistent and
thereby fair by basing it on the principle of “ability to pay”. Let’s also reduce the complexity
so the payers agree and understand why and what they’re paying.
C:2: We have this huge organization in Canada that specializes in “ability to pay”. It’s the Canada
Revenue Agency, or CRA. All the municipality would have to do is send them one number
once a year and that’s it. This number would be the total of their budget.
C:3: The municipalities would pay CRA to make a one time change to their computerized income
tax system. This change would be to divide the municiple budget by the total income in that
municipality and deduct it as a surtax. Call it a municipal service fee. If it's 2.9% then
everyone pays 2.9% of their income. The CRA system totals the collection for each
municipality and transfers it back to the municipalities’ account.
C:4: Advantages:
C:4:a: It's simple and uses a computer system already in existence.
C:4:b: After the initial computer programing the collection cost is $0 instead of paying assessors
millions every year to check if we built a deck in our back yard.
C:4:c: No more creating and mailing a tax bill for EVERY single lot in the province. Any idea of
how many there are?
C:4:d: The cost of assessment appeals is $0
C:4:e: System would better reflect "ability to pay" instead of assuming an old farmer living next
door to a $ million estate is rich.
C:4:f: People would no longer be afraid to improve their properties creating jobs for architects,
engineers, carpenters, plumbers, electricians, landscapers, etc.
C:4:g: The tax base would be much wider instead of just loading it on property owners.
Everyone living in the municipality is using municipal services whether they own property
or not. We all create garbage, walk under a street light, use municipal roads, streets,
parks, rinks, etc. so why are just property owners paying the bill? Water and sewer
would continue under the current fee system.
C:5: Disadvantages:
C:5:a: Foreign owners are not subject to CRA’s system and therefore their income is not known.
For this small percentage of the population they could pay a licensed appraiser to produce
a documented appraisal of their property and send payment to the municipality of 1% of
the appraised value.
C:6: Feasibility
C:6:a: The most relevant system would have been users paying for “services received” since the
municipalities are in the business of providing services. But since all residents, and not
just property owners, are using services it would be impossible to measure.
C:6:b: The “ability to pay” system using CRA is extremely feasible and more so than our current
system. Why wait.
This could be phased in doing one municipality at a time. Let’s see HRM and Nova Scotia pioneer
a system that more are sure to follow.
Barry Zwicker, P.Eng.
www.zengineering.ca